Cisco cuts ties with Chinese firm accused of reselling gear to Iran

Cisco won't tolerate any sales to Iran, CEO says.

Cisco has ended a sales partnership with ZTE, after the Chinese technology firm was accused of selling Cisco networking equipment to Iran despite US sanctions against the country. Cisco's decision became public just as a Congressional report yesterday claimed Chinese companies ZTE and Huawei pose a security threat to the US and can't be trusted to comply with US and international law.

Reuters exposed ZTE's sales to Iranian telecom firm TCI in articles earlier this year, and reported Cisco's decision to cut ties with ZTE yesterday. ZTE "sold banned computer equipment from Cisco and other US companies to Iran's largest telecom firm," Reuters reported, adding that "ZTE also agreed last year to ship millions of dollars worth of additional US tech products, including Cisco switches, to a unit of the consortium that controls the telecom firm."

Cisco CEO John Chambers is quoted as saying that Cisco does not "tolerate any direct or indirect" sales of Cisco products to Iran and other countries facing US sales embargoes. "And when that occurs, we step up and deal with it very firmly," Chambers told Reuters. "So I think you can assume that you will not see that happen again."

ZTE is trying to get back on the good side of Cisco and the US government. ZTE spokesman David Dai Shu told Reuters that "ZTE is highly concerned with the matter and is communicating with Cisco. At the same time, ZTE is actively cooperating with the US government about the probe to Iran. We believe it will be properly addressed."

Cisco used its partnership with ZTE to boost its competitiveness against Huawei in certain foreign markets. According to Reuters, an unnamed former Cisco executive said, "we would license technology to ZTE and they would produce equipment locally, and we could therefore have a range of equipment in the marketplace that would be cost-competitive with Huawei."

Yesterday's congressional report also lends credence to claims that Huawei used Cisco's patented technology in its products.

Guys, obviously Cisco is under control the US government and has built backdoors into all their networking gear sold through ZTE to Iran -- this is just a smokescreen to make it seem like they didn't want Iran to have their gear.

/sarcasm? Now that I've read that back I think it's a solid conspiracy theory. Fly free young theory!

ZTE is highly concerned with the matter and is communicating with Cisco. At the same time, ZTE is actively cooperating with the US government about the probe to Iran. We believe it will be properly addressed.

If ZTE was as highly concerned, they wouldn’t have sold the stuff in the first place. It’s not like the Iran embargos are some sort of high-level-statesmen secret. Everyone knows pretty much all tech that’s more complex than a high pressure cooking pot to boil rice shouldn’t be sold to Iran.

It’s like Samsung claiming they’re highly concerned with keeping their largest customer, Apple, happy and satisfied. A bit too late for that now, is it.

What’s really saddening, though, is that stuff like that seems to be part and parcel of Chinese and Korean industry conglomerate business practices.

Its not just cisco, and their government relations. Every US company is faced with a set of laws about trading with certain countries. These are OFAC laws. And the fines are huge. In cisco's case it is worse because they would also jeopardize government sales, but the prospect of fines alone would serve to keep them in the same position.

Its not just cisco, and their government relations. Every US company is faced with a set of laws about trading with certain countries. These are OFAC laws. And the fines are huge. In cisco's case it is worse because they would also jeopardize government sales, but the prospect of fines alone would serve to keep them in the same position.

Who would be left to make routers for the government of the US? They would get a giant fine but little else.

China no longer need Cisco's gear, not anymore, they got Huawei. If this had happened 15 years ago before the Huawei's time it would have been a whole different ball game played by ZTE and its government. Now is that it's not the same game. But ZTE play a different game. A very smart one too.

ZTE must has gotten the signal from its government and immediately reply to Cisco and beg for its businesses instead of flipping a bird to Cisco and say kiss my ass.

For the reasons:

1. China government instructed ZTE to shows its friendship to the U.S. government through Cisco's deal. It's not for Cisco's gear, like I said, China already got its own - Huawei. How many Cisco gear left in China nowadays? I wonder what's left for the marketshare for Cisco after Huawei.

Not much.

2. China wants U.S. as its number one trading partner. Just like it usual to be. I'm your friend U.S. Not for your U.S. dollars. China got plenty of $. but China must not to piss-off too much of U.S. congress. Or its Yuan would depreciate even furthur more which China would never want that happen again.

3. You know, it never goes wrong for one when he play low and cheap and bow to the mighty and say,

Hopefully more Western governments realise the risk of turning the manufacture of their infrastructure over to firms with ties to potentially (?) hostile governments.

Large Chinese corporations all have ties to their government (or they won't be in business for long) and should never be used for infrastructure contracting by the West... period.

As someone said, this is the outcome and risk of outsourcing all of your technology manufacturing to foreign manufacturers. You also export your expertise and security. It's dangerous.

This...

Seems a cynical view--but most of these firms are mainly focused on the bottom line and short-term gains. And, it has been noted that most of the S&P 500 firms could do fine with a poorer American customer base, given their growing markets overseas. Unless conditions change there...

Keeping innocuous hardware (or trying to) away from the Iranians is just going to increase/maintain resentment against American -- propping up the anti-American regime, while doing nothing to keep Iran from getting a nuke. Don't you think they can smuggle in or get from other sources enough network routers to for alleged secret weapons labs?